Remarks and a Question-and-Answer Session at the Target '82 Fundraising Reception in Santa Barbara, California

August 27, 1981

The President. Thank you. Thank you for your, as always, generous words. I think that we're all very appreciative to our host and hostess for making this beautiful place available to us for this gathering. For those who are too far away to see, I want you to know that those spots on my tie are elephants. [Laughter] I think something in the oriental tradition -- let this be the year of the elephant. [Laughter]

The year I'm thinking about is 1982, because of those fine members of the legislature who are here with us tonight. And the purpose of this -- and it ties in so much with what we've been trying to do in Washington, because behind everything that Holmes was talking about, behind all the changes in the budget and the taxing, is the desire I've had for so long -- to reverse course in this country and return us to a system that is so responsible for our freedom, and that is that we are a federation of sovereign States.

We want to return authority and autonomy that has been seized by the Federal Government to the levels of government closer to the people. And to do that, we're going to have to have people in charge in State and local government who believe in that, who will accept the responsibilities of those functions that have been taken over by the Federal Government that should be returned, can be better run at the State and local level. And it is my hope that through the system of block grants -- we didn't get nearly all that we asked for in that. We're not going to stop trying, because I think of block grants as only a stepping stone to returning sources of taxation to the State and local governments that have been seized by the Federal Government.

Now, we didn't get all that we asked for in our budget cuts either, so in the appropriation process that will now go on we're going to keep trying for that also, because it is a world in which there are certain compromises. And so we didn't get all that we wanted, but I think we sure got a big chunk.

Incidentally, I'm indebted to Bill Campbell and his fellows in the legislature for giving me some figures that I'm going to relay to you. They have already worked that our tax cutting bill, or the reduction of Federal tax rates, will leave over the next 3 years more than $38 1/2 billion in the hands of the people of California to spend as they would spend it rather than the way the Federal Government would spend it. And over 5 years, it will amount to more than $100 billion left in the hands of the people. So, now --

Participant. That will make Governor Brown happy. [Laughter]

Participant. Did you hear what he said?

The President. Yes, I did. I heard that.

Participant. Mr. President, we're going to get rid of Brown.

The President. Yes, I remember when I was running for Governor the first time and they were having trouble up in the orchards then. It was called ``brown rot.'' [Laughter]

Well, listen, I'd like to do something, and I know that I can only take a few, because I know the time is very limited and very pressing here. But it's been -- we have so little opportunity to visit or to have a dialog, and I just have been hungry to do this, and that is instead of me going on up here and talking about what we've done or tried to do in Washington, I would like that maybe a few of you and, as I say, it would have to be just a few, if you have some questions that I might not think of to touch on -- there's a young lady already.

Let me point out one thing. The Fed, Federal Reserve System, is independent, and they're hurting us in what we're trying to do as much as they're hurting everyone else. But, I have to point out also that this is something inherited by the situation we've had and is created somewhat by the market. Now, this year, 1981, when it ends in October, the fiscal year, we're going to have a tremendous deficit. That was built in. That was there before we arrived. And so when I say ``the market,'' the market for capital, private capital out there is strained by the fact that the Federal Government is going into that market and competing for this investment capital. And when you have industry doing it, when you have people who want to have mortgages doing it, when you have the government going in there for a chunk that's going to be bigger than $60 billion for 1981, just the plain law of supply and demand pushes those interest rates up, because there isn't that much private capital.

This is one of the reasons why we wanted the tax cut and think it will be beneficial. We think that more people, with more of their own money in their own hands, will have it available to put in a bank or an insurance policy, to invest, to make more capital available for our needs. And then as we cut the government spending and reduce the need for government to go into that market, those interest rates, we think they will be coming down before the first of the year. But remember, nothing in our program starts until October 1st, and most of it doesn't start until January 1st.

Q. [Inaudible]

The President. The gentleman wants to know if we went on the gold standard, would interest rates be 3 percent? Well, I'm old enough to remember when they were, and we were on a gold standard. But I don't think I have the answer to that, although we have a commission that is studying that very subject of gold and its place in our economy.

Q. Have you had any word from President Qadhafi?

The President. Have I had any word from President Qadhafi? No, but I notice he hasn't gone home yet. [Laughter] He's still traveling. Incidentally, lest someone think that I'm being macabre about any loss of life or anything, as far as we have been able to learn, both of their pilots were picked up from the sea and there was no loss of life in that incident. But it wasn't the first time that they have done things of this kind. We just feel that a principle was involved.

Q. I'm an entomologist, and I'd like to know when we're going to start overhauling one of the biggest bureaucracies of all, the Environmental Protection Agency.

The President. We have a young lady that is director now of the Environmental Protection Agency, and she is introducing as fast as she can common sense in an area that I think has been yielding to environmental extremists. Of course, we've got a fellow named [Secretary of the Interior James G.] Watt, and he's got a few people excited. And I want to tell you, he --

Q. [Inaudible]

The President. Yes, yes we are.

Q. What about the MX missiles? I'm from Vandenberg.

The President. The gentleman from Vandenberg wants to know what about the MX missiles. I have so much -- I can't really call it fun -- but interest every day in reading about what decisions I've made about the MX. [Laughter] The only answer I have for you is that I don't know where we're going to put it, but we're going to have it. Let me make plain. Seriously, I have had presented to me a number of options with regard to our strategic policy, and those options -- I have to choose between those options and make a decision, and that decision has not been made yet.

Q. What surprises you the most?

The President. What surprises me the most? I think the biggest surprise are the leaks. [Laughter] I tell you, I've gotten so that I address some things in the Cabinet meetings to the chandelier. I'm sure it must have a microphone in it. [Laughter] But there just isn't anything -- it's not only the leaks of certain information but, then, suppositions are made or conclusions are drawn and printed as being what's going to be the result of this. And as I say, just like this last question about the MX, we haven't even made a decision, and we're reading in the paper what the decision is supposed to be.

But that's been a surprise. I guess maybe the other surprise has been that, to tell you the truth, after all the horror stories about the job. I'm kind of enjoying myself. [Laughter]

Participant. Don't you think we have a very beautiful, lovely lady serving in the White House? Wouldn't somebody like to ask our lovely lady a question?

The President. You pick the question, Holmes [Tuttle].

Participant. What would you like to ask our First Lady?

Q. [Inaudible] [Laughter].

The First Lady. I don't think he really meant that for me.

Q. Mr. President, do you remember when your nickname was ``Dutch'' and you knew the -- [inaudible] -- sisters?

The President. For heaven's sake, yes. [Laughter]

Q. Mary Ann Foster retired -- [inaudible].

The President. Yes. Please give her my very best regards.

Mr. Tuttle. Mr. President and Nancy, I'd like for you to know that just a little over 3 weeks ago when your office called and said that you'd like to help here, that these great, wonderful workers that you have here went to work. And tonight, in the baseball jargon, we have over 1,200 but we have over 1,100 paid. [Laughter] So, they've come from all the counties, and here they are to say hello to you and thank you for the great job that you're doing for our great country.

The President. On behalf of Nancy and myself, Holmes, let me -- they tell me that we've got to get down from here, and I wish we didn't have to. Well, we do. And I just want to, again, thank all of you. And again, if I can say, 1982, here in this State, we only have to get about four, I think it is, in the Senate. Isn't it? And that will give us a majority there. And 10 in the assembly will give us a majority in that house. Let me just give you a little comparison of what that difference can be.

The other day just coming out here, I picked up the paper and read where in the assembly criminal justice committee, five crime-fighting bills were buried and killed in committee, never got to the floor for a vote. Well, the party that is in the majority names the majority and the chairmen of the committees. And just 1 year, while I was Governor, we had a majority. It was a bare majority. In that 1 year, 41 anticrime bills came out of that committee to the floor, and even the opponents didn't dare vote against them once they were on the floor. That's what can happen.

There's a lady down here that --

Q. [Inaudible]

The President. Oh, thank you very much. This young lady was just -- I can't take any questions. This young lady was just speaking about the ``up'' feeling that has been prevalent in the land for the last few months. Let me tell you where I had the greatest thrill of that, and then we will leave.

Several days ago, before we came back up to the ranch, we were just out there on the other side of the big island, on the other side of Santa Cruz, on the Constellation -- a crew of 5,000 on that aircraft carrier. We saw a demonstration of all that they can do. But something else, to those who have lost faith and don't believe that our volunteer military can do it. I want to tell you that was the biggest morale booster that I've ever had in my life, was to see those young men, probably average age of 19, and to hear a sailor say to me, ``We may not be the biggest navy in the world; we're the best.'' That's the way they feel. It was great.

Well, thank you all.

Q. [Inaudible]

The President. The question was from the young man, ``Are we going to spend government money on the Medfly? I think it is government that is funding the spraying, finally, of that. And it is a very real problem, and maybe the problem was we didn't start spending the money soon enough on the part of government.

I've got to tell you, you ought to see how wonderful that public housing we live in looks now, thanks to what she has done with the help of so many of you that helped and sent money in. You'd really be very proud.

Thank you.

Note: The President spoke at 6:45 p.m. at the Klinger residence, Hope Ranch. As printed above, the transcript follows the text of the White House press release.